How Modi government will tap US agricultural market worth $206B
What's the story
India is poised to tap into the lucrative $206 billion agricultural import market of the United States by leveraging zero-duty and lower reciprocal tariffs. This strategic move comes following the announcement of an interim trade agreement between the two nations. In 2024, India's agricultural exports to the US stood at $3.4 billion against imports worth $2.1 billion, resulting in a trade surplus of $1.3 billion in this sector.
Sectoral impact
Tariff reductions and their implications
The zero-duty concessions will come into effect after the signing of the interim trade agreement in March. Meanwhile, an 18% reduced tariff will be implemented once the US issues an executive order, which is expected this week. Spices and spice products, which currently account for 18% of total US imports worth $2.01 billion, are significant in the context of these tariff cuts.
Additional beneficiaries
Other sectors poised for growth
Other sectors that could benefit from the zero-duty access are tea and coffee, which account for less than 1% of US imports worth $9.38 billion. Fruits such as mangoes and bananas only account for 0.3% of America's total purchases in this category. Processed fruit products make up about 4.6% of US imports worth $759 million, while forestry-linked products account for between 0.2% to 38%.
Tariff advantages
Marine sector and rice imports to gain from tariff cuts
The 18% reciprocal tariff is expected to benefit India's marine sector, including shrimp, in a US import market worth $25 billion. Other sectors that could benefit include basmati and specialty rice, oilseeds such as sesame, and certain fruits. This strategic move by India is aimed at further strengthening trade relations with the US and expanding its footprint in the global agribusiness market.